896778--3/14/2008--CONCEPTUS

related topics

{product, liability, claim}

{product, candidate, development}

{property, intellectual, protect}

{product, market, service}

{capital, credit, financial}

{customer, product, revenue}

{stock, price, share}

{acquisition, growth, future}

{regulation, government, change}

{control, financial, internal}

{regulation, change, law}

{tax, income, asset}

{personnel, key, retain}

{provision, law, control}

{stock, price, operating}

{debt, indebtedness, cash}

We are presently a one product company and if our product fails to gain market acceptance, our business will suffer. Our advertising campaigns may not be successful. We face intense competition, and if we are unable to compete effectively, demand for the Essure system may be reduced. Our investment portfolio is invested in auction rate securities. Failures in the auctions for these securities affect our liquidity, while deterioration in credit ratings of issuers of such securities and/or third parties insuring such investments may require us to adjust the carrying value of our investment through an impairment of earnings. We, our contract manufacturer and our subcontractors may not meet regulatory quality standards applicable to our manufacturing processes, which could have an adverse effect on our business. We may experience disruption in supply due to our dependence on our contract manufacturers to supply our commercial product requirements and our inability to obtain suppliers of certain components for our products. We have a limited history of operation with the Essure system and since inception, have had a negative cash flow from operations and incurred operating losses. We may continue to incur operating losses and we may never achieve or maintain profitability. If the effectiveness and safety of our product are not supported by long-term data, we may not achieve market acceptance and we could be subject to liability. If we fail to manage any expansion or acquisition, our business could be impaired. Our agreements and contracts entered into with partners and other third parties may not be successful. Government or third party reimbursement for the Essure procedure may not be available or may be inadequate, which would limit our future product revenues and delay or prevent our profitability. Recent disruptions in the financial markets could affect our ability to obtain debt financing on favorable terms (or at all) and have other adverse effects on us. We may not maintain regulatory approvals for the Essure system, which would delay or prevent us from generating product revenues and would harm our business and force us to curtail or cease operations. If we lose FDA approval or fail to comply with existing or future regulatory requirements in the United States or internationally, it would delay or prevent us from generating further product revenues. We may be subject, directly or indirectly, to federal and state healthcare fraud and abuse laws and regulations and, if we are unable to fully comply with such laws, could face substantial penalties. Our intellectual property rights may not provide meaningful commercial protection for our product, which could enable third parties to use our technology, or very similar technology, and could impair our ability to compete in the market. If we cannot operate our business without infringing third-party intellectual property rights, our prospects will suffer. We have been, and may be in the future, a party to patent litigation, which could be expensive and divert our management's attention. Our future liquidity and capital requirements are uncertain. The fluctuation of our quarterly results may adversely affect the trading price of our common stock. Health care reform may limit our return on our product. We may be exposed to product liability claims, and we have only limited insurance coverage. We may not be able to attract and retain additional key management, sales and marketing and technical personnel, or we may lose existing key management, sales and marketing or technical personnel, which may delay our development and marketing efforts. We are required to recognize expense for stock-based compensation related to employee stock options and other share-based payment awards, and we cannot assure you that the expense that we are required to recognize measures accurately the value of our share-based payment awards, and the recognition of this expense could cause the trading price of our common stock to decline. Future changes in financial accounting standards or practices or existing taxation rules or practices may cause adverse unexpected revenue fluctuations and affect our reported results of operations. Our 2.25% convertible senior notes present certain liquidity and other risks. Provisions in our charter documents, Delaware law and the indenture for our 2.25% convertible senior notes due 2027 could discourage an acquisition of us by a third party, even if the acquisition would be favorable to you.

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896778--3/14/2008--CONCEPTUS_INC